EMPLOYMENT LAWS OF THE WORLD - Cliffe Dekker Hofmeyr
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EMPLOYMENT LAWS OF THE WORLD
A foreign company must register as an ‘EXTERNAL COMPANY’ BEFORE IT CAN ENTER INTO employment contracts in South Africa, and is required to pay CORPORATE INCOME TAX LAWS OF THE WORLD | cliffedekkerhofmeyr.com
LEGAL SYSTEM, CURRENCY PERMISSIBLE
AND LANGUAGE Employees’ personal information is protected by the Protection
of Personal Information Act, No 4 of 2013 (POPI). Personal
Common law, civil law and customary law, subject information may only be processed if the purpose for which
it is processed is adequate, relevant and not excessive. The
to the Constitution. Rand (ZAR). Eleven official
procedures to be followed to gain access to personal information
languages: Afrikaans, English, Ndebele, Northern
will depend on the nature of the information and the reasons why
Sotho, Sotho, Swazi, Tswana, Tsonga, Venda, Xhosa such information is sought. This may include criminal, credit and
and Zulu. reference checks. There is no statutory limitation in the categories
of positions for which such checks may be conducted. In practice,
CORPORATE PRESENCE due to the cost and effort involved, employers tend to request
background checks where they are relevant to the position
REQUIREMENTS AND PAYROLL applied for, or a warning light is raised in the reference checking
SET-UP or interview process.
A foreign company must register as an ‘external HIRING OPTIONS
company’ before it can enter into employment
contracts in South Africa, and is required to pay EMPLOYEE
Corporate Income Tax.
∞∞ Full-time permanent employment;
The nature of an ‘external company’ is described in the
Companies Act, No 71 of 2008 (Companies Act). Where a ∞∞ Fixed term;
company registered in a foreign country carries on business ∞∞ Part-time; and
or non-profit activities in South Africa it will be regarded as ∞∞ Employment below the minimum hours per month (which
an ‘external company.’ A company is deemed to carry on may result in exclusion from minimum benefits).
business in South Africa, inter alia, if it has entered into one or
more employment contracts with effect in South Africa. The INDEPENDENT CONTRACTOR
consequences of being an ‘external company’ are dealt with in Independent contractors are excluded from the employment
s23 of the Companies Act, which provides, inter alia, for protections afforded to employees, but legislation imposes a
registration with the Companies and Intellectual Property presumption of employment if certain elements exist in the
Commission (Commission) within 20 business days of working relationship, such as the right of supervision on the
commencing business in South Africa, and must maintain at part of the employer. The presumption applies only to persons
least one office in South Africa, which is registered with the earning below a threshold amount published annually in terms
Commission. Companies (including external companies) are of the Basic Conditions of Employment Act, No 75 of 1997
obliged to register and deduct tax from an employee’s salary and, (BCEA), currently set at R205,433.30 (BCEA Threshold). For other
in addition, have reporting duties to the South African Revenue workers, the common law dominant impression test will apply
Services (SARS). The maximum personal tax rate is currently 40%. which implies that there is no single indicator of an employment
Employers are required to contribute to prescribed employee relationship. Instead, the court will look at the relationship
benefit funds and make contributions to an unemployment benefit as a whole, to determine whether the relationship is one of
fund. Employee contributions to the unemployment benefit fund employment or independent contracting. The level of control
are deducted and paid on their behalf by the employer. exercised by the employer over the ‘employee’ is one of the
aspects considered.
IMMIGRATION LABOUR BROKER
ALL NON-CITIZENS MUST HOLD AN APPROPRIATE WORK VISA. Employees earning below the BCEA Threshold enjoy additional
protection if placed at a client through a labour broker (also called
A local sponsor for a work visa is generally required and it is temporary employment service or agency). Except in limited
also necessary to show that no local person is capable of filling circumstances, after an initial period of placement, the worker
the applicant’s position. Foreign nationals who overstay will be will be deemed jointly employed by the client and labour broker,
declared undesirable and their employment prohibited. and become entitled to have terms of employment comparable
to permanent employees of the client. No deemed employment
PRE-HIRE CHECKS applies to higher earning labour broker employees.
REQUIRED
Immigration compliance. Profession specific requirements may
apply, subject to the profession in question, eg, directors of
companies may not be unrehabilitated insolvents.
LAWS OF THE WORLD | cliffedekkerhofmeyr.com
EMPLOYMENT CONTRACTS AND
POLICIES
REQUIREMENTS
No formalities are required, but written employment agreements
are common. A contract comes into existence upon valid
acceptance of a valid offer of employment. Consensus with regard
to the nature of the services rendered and remuneration is required.
On commencement of the employment relationship the employer
is required to provide the employee with information such as the
calculation and method of payment. The employee cannot contract
out of certain minimum terms of service contained in the BCEA.
POLICIES
No specific policies are mandatory. Employers are not required
to have written health and safety policies but are required to
adhere to the requirements contained in the Occupational
Health and Safety Act, No 85 of 1993. Codes of good practice
may recommend particular policies. Codes of good practice are
generally published as guidelines to employers, and are often not
binding, except to the extent that enabling legislation determines
otherwise (eg the enabling legislation may require decision
makers in arbitration tribunals to have regard to the code, failing
which they may commit reviewable irregularities).
A failure to abide by the codes must however be explained by
the employer, and in the absence of good cause, may render
employer action unfair.
PROBATION
Permissible for a ‘reasonable period’ (normally between three and
six months).
THIRD PARTY APPROVAL
None required.
EMPLOYEE REPRESENTATION
Employees are constitutionally entitled to join a trade
union, to be represented by such a trade union and
to strike.
The result is an extensive framework of collective bargaining,
organisational rights, collective agreements and bargaining councils
that play a central role in most commercial and employment
activities. Industry-wide collective bargaining agreements may be
concluded. These agreements may apply to parties in a Bargaining
Council (a body formed by organised labour and organised
employers for a particular sector which, inter alia, creates a forum for
collective bargaining applicable to the whole or part of the industry).
Employer parties may be bound to a collective agreement concluded
in a Bargaining Council, even if they did not themselves agree to the
collective agreement, and may even be extended to employers who
are not members of the Bargaining Council. Conditions apply.
LAWS OF THE WORLD | cliffedekkerhofmeyr.com
LANGUAGE REQUIREMENTS OVERTIME
Overtime may be worked by agreement. An agreement to work
When rights of employees are affected, employers are overtime, concluded in the first three months of employment is
required to ensure that the employees understand the only valid for 12 months. Limitations on maximum overtime apply
action taken, or information imparted. (10 hours per week, or 15 hours in terms of a collective
agreement), but agreements on compressing work weeks and
This may require that information be supplied in a language that
averaging of work hours can alleviate limitations. Compensation
the employees can understand. Disciplinary proceedings may
for overtime is payable to employees earning below the BCEA
be considered unfair if conducted in a language with which the
Threshold, but higher earning employees are excluded from
employee is insufficiently familiar to enable effective participation
overtime payment unless the employment contract provides to
in the proceedings. Translators must then be supplied.
the contrary. Minimum statutory overtime rates are either one and
a half times the normal rate, or two times the normal rate, with the
DISCRIMINATION highest rate being payable if the overtime is worked on a Sunday
or public holiday and the employee is not normally required to
Direct and indirect discrimination are prohibited. work on Sundays and/or public holidays. Time off may be given
sexual harassment and unequal pay constitute unfair in lieu of paying overtime, by agreement.
discrimination and are given express protection.
WAGES
Designated employers are obliged to put into place affirmative
action policies, including numerical targets but excluding quotas, No general prescribed minimum wage applies. Sectoral
to increase access to opportunities for previously disadvantaged determinations provide for minimum terms and conditions of
South African citizens (African, Coloured and Indian people, employment in a particular industry or sector, which include
women and people with disabilities). minimum wages. A sectoral determination is promulgated by the
Minister of Labour, and sets up basic conditions of employment
The listed grounds protected from unfair discrimination are race,
for specific sectors and areas. This is normally used for sectors
gender, sex, pregnancy, marital status, family responsibility, ethnic
that are not well organised and where individual or collective
or social origin, colour, sexual orientation, age, disability, religion,
bargaining is unlikely to be able to achieve equitable agreements
HIV status, conscience, belief, political opinion, culture, language,
on improvements to terms and conditions of service.
birth and any other arbitrary ground.
VACATION
MINIMUM EMPLOYMENT RIGHTS Minimum three weeks’ paid annual leave as well as 12 days’
EMPLOYEES ENTITLED TO MINIMUM EMPLOYMENT RIGHTS statutory holidays, on full remuneration.
Independent contractors are excluded from all employment SICK LEAVE AND PAY
protection. Specific categories of employees may further
be excluded from some legislative protections, for instance All employees are statutorily entitled to paid sick leave of six
employees working less than 24 hours per month are excluded weeks per 36 month employment cycle. Payment of sick leave is
from minimum employment terms under the BCEA, and based on wages, not full remuneration. The latter term includes
employees earning above the BCEA Threshold are not entitled to the former, as well as all other payments in cash or kind. Note
overtime payments unless their contracts of employment provide however that the exact composition of remuneration may differ
otherwise. depending on the particular statutory provision, for instance,
it has a slightly different content when calculating severance
WORKING HOURS benefits.
∞∞ Maximum 45 hours a week, subject to the exemptions Pro-rated leave entitlements may apply for shorter periods of
identified in the BCEA (eg employees earning above the BCEA employment and in the first six months of employment.
Threshold, senior managerial employees, etc.).
∞∞ Rules on rest breaks, night work and rest periods between
shifts apply.
DATA PRIVACY
∞∞ Agreements on compressing work weeks and averaging of Employee monitoring is impacted by legislation,
work hours can impact maximum work hours. including POPI, but not prohibited.
MATERNITY/PARENTAL LEAVE AND PAY POPI restricts the extent to which employers can access the private
information of its employees. Employees must generally be notified
A minimum of four consecutive months of unpaid maternity
of the reason for personal data processing, and provide consent.
leave. Employees may claim partial remuneration through the
Unemployment Insurance Fund.
No specific paternity leave, however family responsibility leave
of three days per year (non-cumulative) can be used as paternity
leave, or as contractually agreed.
LAWS OF THE WORLD | cliffedekkerhofmeyr.comBENEFITS AND PENSIONS NOTICE
Minimum BCEA notice periods of between one week and four
The contract of employment will determine whether weeks apply, unless contracts (individual or collective) provide for
the employee is entitled to any further benefits, longer notice, or a collective agreement provides a shorter period.
including subsistence, travel and pension allowances, Notice to be given in writing. Notice cannot be given while the
bonuses or acting allowances. employee is on any type of leave.
No mandatory membership of a retirement fund applies.
STATUTORY RIGHT TO PAY IN LIEU OF NOTICE OR
GARDEN LEAVE
TERMINATION The employer may freely elect to pay remuneration in lieu of
GROUNDS notice, irrespective of who gives notice. The decision to waive the
obligation to work during a notice period rests with the employer,
Unilateral termination of employment is permissible provided it but the employee must agree to a waiver of the obligation to pay
is substantively and procedurally fair. Dismissal is only justifiable remuneration. The employee cannot be compelled to take accrued
by reason of misconduct, capacity (ill-health or performance) or leave during the notice period. Garden leave is neither regulated by
operational requirements. Termination by effluxion of time statute, nor commonly provided for in employment contracts.
(ie fixed term agreement comes to an end or the employee
reaches retirement age) is not considered dismissal, hence no
requirement of fair reason or fair process applies. POST-TERMINATION RESTRAINTS
In principle enforceable, with the party seeking to
EMPLOYEES SUBJECT TO TERMINATION LAWS
escape its effect having the onus of proving that the
All employees, from the beginning of the employment restraint ought not to be enforced, for being against
relationship, are entitled to dismissal protections although public policy.
termination is easier during a probation period. Independent
contractors are not protected. The enforcing party must, however, be able to show a protectable
interest, and the limitations to competition must not go beyond
PROHIBITED OR RESTRICTED TERMINATIONS what is reasonably necessary to protect such legitimate business
interest. Protectable interests include client relationships and
Automatically unfair dismissals are prohibited, and increased trade secrets.
penalties will attach if a dismissal is motivated by one of the
prescribed prohibited reasons. Automatically unfair dismissals NON-COMPETES
include for instance dismissals due to employee participation
in lawful strike action and dismissals due to an employee’s Permissible both on a temporal and geographic scale.
pregnancy or a reason related to pregnancy. Determination of enforceability of a restraint agreement is done
on a case by case basis. A restraint will only be enforced if the
THIRD PARTY APPROVAL FOR TERMINATION/TERMINATION employer has a protectable interest worthy of being protected at
DOCUMENTS the time of an alleged breach of the restraint, and to the extent
that the restraint does not exceed what is necessary to protect
Not required. such interest. In some instances a longer restraint (and/or for a
wide geographical area) may be justified if the protectable interest
SEVERANCE requires this, and the impact on the employee does not outweigh
∞∞ Only payable in the event of operational requirement the impact on the employer, while in another case, a shorter
dismissals. period may be justified.
∞∞ Minimum of one week’s remuneration per completed year
of service, subject to additional payments agreed in the CUSTOMER NON-SOLICITS
consultation period. Severance is one of the mandatory topics
Permissible.
of consultation.
MASS LAYOFF RULES EMPLOYEE NON-SOLICITS
Strict information and consultation rules apply to all mass Permissible.
layoffs (operational requirement dismissals or retrenchments).
Additional requirements apply to large scale retrenchments (size
of retrenchment determined on a sliding scale, by reference to
number of affected employees compared to total employees).
No notice to government officials required.
LAWS OF THE WORLD | cliffedekkerhofmeyr.comWAIVERS
Employees can contract out of common law rights
without any formalities.
The right to waive statutory rights may however be limited (ie
only to the extent that legislation may allow such waiver). No
specific requirement that the employee waiving a right must be
represented, or for any formalities to be met.
CRIMINAL SANCTIONS
Employment law is largely decriminalised, however,
specific legislation renders some behaviour a criminal EMPLOYMENT LAW
offence.
For instance, disclosure of the private information of employees
IS LARGELY
to third parties is an offence.
DECRIMINALISED,
REMEDIES HOWEVER
DISCRIMINATION AND SEXUAL HARASSMENT SPECIFIC LEGISLATION
RENDERS SOME BEHAVIOUR
Claims must first be referred to the Commission for Conciliation,
Mediation and Arbitration (CCMA) or a Bargaining Council with
A CRIMINAL OFFENCE
jurisdiction for conciliation. If conciliation fails, the claim is
referred to the Labour Court for adjudication, or for arbitration
at the CCMA or Bargaining Council in limited circumstances
(ie, sexual harassment cases, with the parties’ consent, or if the
complainant earned below the BCEA Threshold). Strict time limits
apply.
Remedies include compensation (unlimited) and damages (limited
to the BCEA Threshold).
UNFAIR DISMISSALS AND UNFAIR LABOUR PRACTICES
The majority of disputes must be referred to the CCMA or
Bargaining Council with jurisdiction for conciliation. If conciliation
fails, the nature of the dispute determines whether the dispute must
be referred to adjudication at the Labour Court, or arbitration at the
CCMA or Bargaining Council. Strict time limits apply.
Remedies are primarily reinstatement (possibly retrospective) and
compensation, limited to a maximum of 12 months’ remuneration for
unfair dismissal and 24 months for automatically unfair dismissal.
FAILURE TO INFORM AND CONSULT
There is no separate cause of action for failure to consult, but this
may constitute the basis of a finding of procedural unfairness in
an operational requirements dismissal. Where only procedural
unfairness is found, the reinstatement remedy is not available.
LAWS OF THE WORLD | cliffedekkerhofmeyr.comMARKET RECOGNITION
Our Employment team is externally praised for its depth of resources, capabilities and experience.
Chambers Global 2014–2019 ranked our Employment practice in Band 2 for employment. The Legal 500 EMEA 2009–2018 recommended
us in Tier 2 for employment law. Our practice was identified as leading in The International Who’s Who of Management Labour and
Employment Lawyers 2013.
The way we support and interact with our clients attracts significant external recognition.
Aadil Patel is the National Practice Head of the Employment team. Chambers Global 2015–2019 ranked him in Band 2 for employment.
The Legal 500 EMEA 2012–2018 recommended him for employment. Best Lawyers International 2018–2019 listed him for labour and
employment law. He was named as the exclusive South African winner of the ILO Client Choice Awards 2014 in the employment & benefits
category. Who’s Who Legal 2017–2018 identified Aadil as a leading labour & employment practitioner. He was identified in The International
Who’s Who of Business Lawyers 2014, and in The International Who’s Who of Management Labour and Employment 2011–2014.
Best Lawyers International 2019 listed Jose Jorge for employee benefits law.
Chambers Global 2017–2019 ranked Gillian Lumb in Band 4 for employment. The Legal 500 EMEA 2012–2014 and 2017–2018
recommended her for employment. Best Lawyers International 2018–2019 listed Gillian for labour and employment law.
Chambers Global 2014–2019 ranked Hugo Pienaar in Band 2 for employment. The Legal 500 EMEA 2014–2018 recommended him for
employment. Best Lawyers International 2018–2019 listed Hugo for labour and employment law. He was named as the exclusive South
African winner of the ILO Client Choice Awards 2017, 2019 in the employment & benefits category.
Chambers Global 2018–2019 ranked Fiona Leppan in Band 2 for employment. Chambers Global 2016–2017 ranked her in Band 3 for
employment. The Legal 500 EMEA 2012–2018 recommended her for employment. Best Lawyers International 2018–2019 listed Fiona
for labour and employment law. IFLR1000 2012 recommended Fiona as a leading lawyer. Who’s Who Legal Thought Leaders Global Elite
identified her as a leading lawyer for 2018. Who’s Who Legal 2017–2018 identified Fiona as a leading labour & employment practitioner. She
was identified in The International Who’s Who of Business Lawyers 2014, and in The International Who’s Who of Management Labour and
Employment 2011–2017.
Best Lawyers International 2017–2019 listed Samiksha Singh for employee benefits law.
Chambers Global 2018–2019 ranked Gavin Stansfield in Band 4 for employment. Best Lawyers International 2019 listed Gavin for employee
benefits law. Who’s Who Legal 2017–2018 identified him as a leading labour & employment practitioner.
ILO Client Choice Awards 2015-2016 named Michael Yeates the exclusive South African winner in the employment & benefits category.
In 2018, he was named the exclusive South African winner in the immigration category.
9
EMEA
1 ST BY M&A DEAL FLOW FOR
THE 10TH YEAR IN A ROW.
9 YEA
YEARS IN A ROW
BAND 2 2009-2018 2018 1 by M&A Deal Flow.
st
1 st by M&A Deal Value. CDH has been named South Africa’s
Employment 2nd by General Corporate Finance number one large law firm in the
Recommended us in Deal Flow. PMR Africa Excellence Awards for
1 st by BEE M&A Deal Value. the ninth year in a row.
2nd by BEE M&A Deal Flow.
TIER 2 Lead legal advisers on the Private
Equity Deal of the Year.
Cliffe Dekker Hofmeyr Employment
EMPLOYMENT | cliffedekkerhofmeyr.comOUR TEAM
For more information about our Employment practice and services, please contact:
Aadil Patel Thabang Rapuleng Anelisa Mkeme
National Practice Head Director Senior Associate
Director T +27 (0)11 562 1759 T +27 (0)11 562 1039
T +27 (0)11 562 1107 E thabang.rapuleng@cdhlegal.com E anelisa.mkeme@cdhlegal.com
E aadil.patel@cdhlegal.com
Gillian Lumb Samiksha Singh Sean Jamieson
Regional Practice Head Director Associate
Director T +27 (0)21 481 6314 T +27 (0)11 562 1296
T +27 (0)21 481 6315 E samiksha.singh@cdhlegal.com E sean.jamieson@cdhlegal.com
E gillian.lumb@cdhlegal.com
Kirsten Caddy Gavin Stansfield Zola Mcaciso
Director Director Associate
T +27 (0)11 562 1412 T +27 (0)21 481 6313 T +27 (0)21 481 6316
E kirsten.caddy@cdhlegal.com E gavin.stansfield@cdhlegal.com E zola.mcaciso@cdhlegal.com
Jose Jorge Michael Yeates Tamsanqa Mila
Director Director Associate
T +27 (0)21 481 6319 T +27 (0)11 562 1184 T +27 (0)11 562 1108
E jose.jorge@cdhlegal.com E michael.yeates@cdhlegal.com E tamsanqa.mila@cdhlegal.com
Fiona Leppan Ndumiso Zwane Bheki Nhlapho
Director Director Associate
T +27 (0)11 562 1152 T +27 (0)11 562 1231 T +27 (0)11 562 1568
E fiona.leppan@cdhlegal.com E ndumiso.zwane@cdhlegal.com E bheki.nhlapho@cdhlegal.com
Hugo Pienaar Steven Adams Siyabonga Tembe
Director Senior Associate Associate
T +27 (0)11 562 1350 T +27 (0)21 481 6341 T +27 (0)21 481 6323
E hugo.pienaar@cdhlegal.com E steven.adams@cdhlegal.com E siyabonga.tembe@cdhlegal.com
Nicholas Preston Anli Bezuidenhout
Director Senior Associate
T +27 (0)11 562 1788 T +27 (0)21 481 6351
E nicholas.preston@cdhlegal.com E anli.bezuidenhout@cdhlegal.com
BBBEE STATUS: LEVEL TWO CONTRIBUTOR
This information is published for general information purposes and is not intended to constitute legal advice. Specialist legal advice should always be sought
in relation to any particular situation. Cliffe Dekker Hofmeyr will accept no responsibility for any actions taken or not taken on the basis of this publication.
JOHANNESBURG
1 Protea Place, Sandton, Johannesburg, 2196. Private Bag X40, Benmore, 2010, South Africa. Dx 154 Randburg and Dx 42 Johannesburg.
T +27 (0)11 562 1000 F +27 (0)11 562 1111 E jhb@cdhlegal.com
CAPE TOWN
11 Buitengracht Street, Cape Town, 8001. PO Box 695, Cape Town, 8000, South Africa. Dx 5 Cape Town.
T +27 (0)21 481 6300 F +27 (0)21 481 6388 E ctn@cdhlegal.com
©2019 0649/MAR
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